Indonesia's new opportunities

Page Tools

With a new reformist President in place, Indonesia is suddenly
back on the diplomatic "A" list.

And the Prime Minister, John Howard, is very keen to come to the
party. What a difference a decade makes.

The election of Susilo Bambang Yudhoyono this month promises the
revival of Indonesia's leadership role in the region and possibly
beyond. Canberra's renewed enthusiasm for co-operation should come
with far less baggage attached than the previous courtship of
Jakarta under the former prime minister Paul Keating. Mr Keating
built his special rapport in the 1990s by deferring to Indonesia's
then authoritarian leader, Soeharto, as the region's "elder
statesman". It was a pragmatic recognition of Soeharto's power, but
one which sat uneasily with the Australian public. Indonesia's
first popularly elected president is a different prospect
altogether. Canberra has good reason to want to step out at a
democrat's side.

Indonesia sought to make its mark on world affairs very soon
after proclaiming independence from the Dutch in 1950. In 1955 it
hosted the first meeting of what was to become the Non-Aligned
Movement of developing nations. In the late '80s, Indonesia played
a key role with Australia in brokering a peace deal for Cambodia
and in 1994 hosted world leaders at the APEC summit in Bogor.
Within the Association of South-East Asian Nations Indonesia - with
200 million people and a vast swathe of territory and waters -
assumed a natural leadership role. But the Asian economic crisis of
1997 brought Indonesia to its knees. By May the following year the
crisis had claimed Soeharto's presidency and in the uncertainty
which followed, Indonesia retreated from the world stage.

The overwhelmingly positive international response to Dr
Yudhoyono's election is partly due to his pro-Western,
market-oriented platform and his pledge to swap policy paralysis
for sweeping reforms. It is also a result of the unexpectedly
smooth democratic process which brought Dr Yudhoyono to office.
Hundreds of millions of ballots were successfully cast this year in
national and presidential elections - one of the world's most
complex electoral exercises. But it is more than that. Indonesia
boasts a moderate Muslim majority and a historic commitment to
religious pluralism. This makes Jakarta a very desirable ally for
the West, not just in a strategic war on terrorism - including the
fight against Indonesian-based extremist cells - but in the broader
ideological battle to demonstrate that Islam and democracy can
co-exist.

That is the big promise. It is by no means certain, however,
that Dr Yudhoyono can overcome the daunting vested interests which
stand in his way in Indonesia. For Australia, closer ties with
Indonesia could help open doors across Asia, and Dr Yudhoyono's
cabinet includes at least one senior economist with a close
affinity for Australia. But Canberra needs to be wary of
unrealistically high expectations. Indonesian Muslims are
moderates, but many perceive Western attitudes towards Islam as
uniformly negative. This means Dr Yudhoyono will need to steer a
somewhat independent course. And that will make him a somewhat
unpredictable new friend.

Rupert Murdoch's excellent adventure

In the end the vote yesterday was a formality, but Rupert
Murdoch's move of the home base of Australia's biggest company is
anything but ordinary.

It is a necessary step in a remarkable epic, the man who was
left a small Adelaide newspaper company when his father died in
1952 and who shrewdly transformed it into a global media house
which, with the purchase of DirecTV, is one of the world's
largest.

The rite of passage to a US domicile for News Corp was not
smooth and required Mr Murdoch's intervention in the dying weeks,
offering just enough tweaking of the terms of the deal. In
particular, aspects of corporate governance were changed to win the
necessary nods from major shareholders on both sides of the
Pacific. While Mr Murdoch has long held US citizenship to allow him
to own US television licences, the move of the $65 billion company
is designed to give it better access to finance as it continues
what most expect to be inexorable expansion.

Shareholders, of course, are not swayed by national sentiment,
nor should they be. They have voted for the move because they
believe, at least in the medium term, that it will bring them
advantage. In the short term the share price has been buffeted by
the decision to remove News Corp from the key Australian
sharemarket index. And the new US stock, which will also be listed
in Australia from next week, is expected to remain volatile as it
finds its level in the S&P 500 index on the New York Stock
Exchange. The Murdoch family may use the volatility to boost their
control and few doubt the company will move to consolidate its hold
on Fox Entertainment and expand its global satellite TV platform.
At the very least.

"For as long as my family is a major shareholder in this company
- and let me assure you that will be a very, very long time, as far
as we are concerned - News Corporation will always be defined by an
Australian spirit," Mr Murdoch noted at yesterday's vote. "It is
from Australia that this company derives its entrepreneurial
energy, brashness and ... our accents." As controller of 75 per
cent of the Australian newspaper market, he remains a fierce and
respected competitor and his presence here is unlikely to be
diminished any time soon. Mr Murdoch is cementing himself as
Australia's most successful international businessman, whatever his
citizenship and wherever his corporate base.